DOL Seeks Public Comments on Changes to Fiduciary Rule, Pledges to Work with SEC on Uniform Standard

The chairs of the Securities and Exchange Commission and the Department of Labor testified before separate Senate Appropriations Subcommittees this week on their respective fiscal year 2018 budget requests, with both chairmen affirming their willingness to work together on the DOL’s fiduciary rule that began implementation earlier this month.

This was just the first indication this week that the rule as it presently stands is likely going to change significantly under the Trump administration, as the DOL late yesterday requested comments from the public regarding changes to the rule prior to final implementation on Jan. 1, 2018.

Specifically, the DOL issued a request for information on the agency’s fiduciary rule and prohibited transaction exemptions. The agency is seeking public input on extending the January 1, 2018 applicability date and is also asking the public to weigh in on possible additional exemption approaches or changes to the rule. The request is expected to be published in the Federal Register next week.

Comments relating to extending the January 1st applicability date must be submitted 15 days from the date of publication in the Federal Register, while other responses must be submitted within 30 days of publication.

At the budget hearing before Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, Senator James Lankford (R-OK) questioned DOL chairman Alexander Acosta on how the fiduciary rule conversation with the SEC is faring.

Acosta noted that the SEC did not coordinate with the Department of Labor previously, but that is expected to change in the future.

“I think the SEC has important expertise and they need to be part of the conversation,” said Acosta. “I asked [SEC Chairman Jay Clayton] if the SEC would be willing to work with us and the chairman indicated his willingness to do so. It is my hope as the SEC also receives a full complement of commissioners, that it will continue to work with the Department of Labor on this issue.”

At the Senate Appropriations Subcommittee on Financial Services and General Government, Senator Jerry Moran (R-KS) told SEC Chairman Jay Clayton that he was worried that there was a “lack of regulatory harmonization” between the DOL and SEC on the fiduciary rule.

Chairman Clayton noted that the issue is “very complicated” but that he was confident that the two agencies would cooperate.

“What’s happening at the Department of Labor is going to affect the markets we regulate and vice versa, said Clayton. “It’s my intent as chairman to try and move forward and effectively deal with that in a way that is coordinated, so that our Main Street investors have access to investment advice and access to investment products.”

He added, “I don’t want to see any of these actions that we would take reduce the access to investment advice or the access to investment products. At the same time very much fulfilling our investor protection mission.”

Earlier this month, the SEC issued a request for public comment on standards of conduct for investment advisers and broker-dealers that provide investment advice to retail investors.

The DOL is conducting an ongoing examination of the rule as directed by President Donald Trump.